Outlook for the Future: Difference between revisions
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Federal deficits reduce the future standard of lining by lowering national saving which slows the accumulation of national wealth. Increases in government spending (increased government consumption) and federal tax cuts (increased public consumption) increase the federal deficit and reduce national saving. Even if the financial market (i.e. interest rates) is not significantly affected by the shifting of resources from from saving to consumption, decreased national saving can still occur. Although domestic investment is reduced by federal deficits, captial inflows from abroad tend to increase the productivity or both labor and capital. | Federal deficits reduce the future standard of lining by lowering national saving which slows the accumulation of national wealth. Increases in government spending (increased government consumption) and federal tax cuts (increased public consumption) increase the federal deficit and reduce national saving. Even if the financial market (i.e. interest rates) is not significantly affected by the shifting of resources from from saving to consumption, decreased national saving can still occur. Although domestic investment is reduced by federal deficits, captial inflows from abroad tend to increase the productivity or both labor and capital. | ||
=Budgeting Strategies= | =Budgeting Strategies= | ||
Revision as of 10:22, 4 May 2006
Effects of Rising Debt on the Economy
Federal deficits reduce the future standard of lining by lowering national saving which slows the accumulation of national wealth. Increases in government spending (increased government consumption) and federal tax cuts (increased public consumption) increase the federal deficit and reduce national saving. Even if the financial market (i.e. interest rates) is not significantly affected by the shifting of resources from from saving to consumption, decreased national saving can still occur. Although domestic investment is reduced by federal deficits, captial inflows from abroad tend to increase the productivity or both labor and capital.
Budgeting Strategies
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